Page images
PDF
EPUB

BONDS AND INSURANCE

dinarily be considered adequate. The Surety Association of America's standard bond form, or its equivalent, shall be used. When blanket fidelity insurance is purchased, carriers will be cautioned to apply all appropriate discounts.

(c) When a forgery bond or policy is required, a penal sum of $10,000 will ordinarily be considered sufficient. The Surety Association of America's standard depositors form of forgery bond or policy, or its equivalent, shall be used.

(d) Unless included as part of the bond form, the following provisions shall be included as riders or endorsements to fidelity and to forgery bonds or policies:

(i) a pro rata refund of the premium will be made in the event of cancellation by the insureds due to completion of the work under the contract;

(ii) the contracting officer will be given notice prior to cancelling or making any material change in the bond;

(iii) after a loss has been sustained, the full amount of the bond shall be restored without additional premium charge to protect against undiscovered or future losses;

(iv) the surety waives all rights to be subrogated, on payments of losses or otherwise, on any claim against the Government arising out of performance of a cost-reimbursement type contract; and

(v) in fidelity bonds only, the surety shall investigate all Class A employees as reported by the contractor and shall investigate all claims.

10.105-4 Other Bonds. Other types of bonds may be used only when, in the opinion of the head of the installation, such bonds are necessary or desirable in connection with the procurement of particular supplies or services.

10.106 through 10.109 [Reserved]

10.110 Substitution of Surety Bonds. A new surety bond may be substituted for a bond previously approved covering part or all of the same obligation. When the new surety is determined acceptable, the principal and surety of the original bond will be notified that the original bond will not be considered as security for any default occuring after the date of acceptance of the new bond.

10.111 Additional Bond and Increase of Penalty.

10.111-1 Additional Bond. Requirements for additional bond resulting from changes or modifications to construction contracts are prescribed by 10.103-1(b) and 10.103-2(b). If a contract other than a construction contract for which a performance or payment bond has been executed is increased in price or modified to cover new or additional work, the contracting officer shall decide whether additional bond should be required in order to adequately protect the interest of the Government (the criteria of 10.104-1 and 10.104-2 may be used as a general guide for this purpose). The following form for Consent of Surety and Increase of Penalty is authorized for contract modifications to all types of contracts that provide for an increase in the penal sums of bonds previously given by the original surety or sureties. If there has been more than one surety on the bond or bonds, use the word or words in brackets and provide for additional signatures as necessary.

BONDS

CONSENT OF SURETY AND INCREASE OF PENALTY

Modification No.

Contract No.

dated

The surety [cosureties] hereby consents [consent] to the foregoing contract modification and agrees [agree] that its [their] bond or bonds shall apply and extend to the contract as thereby modified or amended. The principal and the surety [cosureties] further agree that on and after the execution of this consent, the penalty of the aforementioned performance bond or bonds is hereby increased by dollars ($_____________ and the penalty of the aforementioned payment bond or bonds is hereby increased by dollars ($ _). Provided, however, that the increase of the liability of each cosurety resulting from this consent shall not exceed the sums set forth below:

NAME OF
SURETY

INCREASE IN LIABILITY INCREASE IN LIABILITY
LIMIT UNDER PERFORM- LIMIT UNDER PAYMENT
ANCE BOND
BOND

[blocks in formation]

*This Consent of Surety and Increase of Penalty shall be executed by the principal or his authorized representative concurrent with the execution of the attached modification

NASA PROCUREMENT REGULATION

10.111-1

BONDS AND INSURANCE

to which it pertains. If the individual who signs the consent is signing in a representative capacity (e.g., attorney in fact), but is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved, a Power of Attorney or Certificate of Corporate Principal, as appropriate, shall be submitted with the consent.

10.111-2 Consent of Surety. The following consent of surety shall be obtained from the surety or sureties on existing bonds in connection with any amendment, modification or supplemental agreement if:

(i) additional bond is obtained from other than the original surety;

(ii) no additional bond is required and (A) the modification is for new or additional work beyond the scope of the contract, or (B) the modification does not enlarge or diminish the scope of the contract, but changes the contract price (upward or downward) by more than $25,000 or 10 percent of the contract price; or

(iii) consent of surety is required in connection with a novation agreement (see 26.402(b)(x)).

If there is more than one surety on the bond or bonds, the cosureties may either execute a separate consent in the form here prescribed, or they may join in executing a single such consent using the words in brackets and adding additional executions of sureties similar to that set forth in the form.

[blocks in formation]

The surety [cosureties] hereby consents [consent] to the foregoing contract modification and the surety (sureties] agrees (agree] that its [their] bond or bonds shall apply and extend to the contract as thereby modified or amended.

[blocks in formation]

(Type Name and Title of Person Executing) (Add similar signature blocks for cosureties.) 10.111-3 Additional Bond-New Surety. If additional bond coverage is required and will be furnished in hole or in part by a new surety, such surety must furnish its first bond coverage on a standard bond form (Standard Form 25 or 25-A, as appropriate).

10.112 Execution and Administration of Bonds and Consents of Surety.

10.111-2

CFR TITLE 41 CHAPTER 18

BONDS

(a) Execution. Several prescribed forms for bonds and related documents are listed in 16.805. Bonds and related documents executed on such forms shall comply with the instructions accompanying each form. The IFB or RFP may provide for execution and submission of more than one copy if desired. When required by Instruction Number 2 of the standard bond forms, the evidence of authority of a principal's representatives shall be a duly executed power of attorney reciting that the individual executing the bond or consent of surety is authorized to do so. A corporation, in lieu of such power of attorney, may submit a "Certificate as to Corporate Principal" in the format prescribed in (c) below.

(b) Administration. It is the responsibility of the contracting officer to obtain all bonds required by law and regulation. The Treasury Department list of corporate sureties certified by the Secretary of the Treasury as being acceptable as sureties on Federal bonds, and provision for the distribution of up-to-date copies of the list, are discussed in 10.201-1. All bonds will be reviewed by the contracting officer to ascertain that the bond is in the penal sum required and, when appropriate, properly describes the contract. The contracting officer shall determine whether the corporate surety which executed the bonds appears on the latest Treasury Department list of acceptable sureties. If the name of the surety does not appear on the list, the Assistant Administrator for Procurement, NASA Headquarters (Code HP) will be advised by the most expeditious means in order to determine from the Surety Bond Section, Treasury Department, whether the corporate surety has been approved subsequent to the issuance of the latest list. When the surety on a bond is not acceptable, the contracting officer shall return the bond to the bidder by letter, advising that the surety on the bond is not acceptable because of lack of Treasury Department approval. When time permits and when it would be to the best interest of the Government, the bidder may be permitted a specific period of time in which to submit an acceptable bond. When a contractor is performing his contract in such a manner as to lead to default, timely notification to the surety may result in action by the surety that will avoid a default. Therefore, on all such contracts, the surety shall be promptly notified of any failure by the contractor to perform (see 8.602-4(i)).

(c) Certificate As To Corporate Principal. When a Certificate As To Corporate Principal is to be furnished, the following format shall be used.

CERTIFICATE AS TO CORPORATE PRINCIPAL

[ocr errors]

I, (Name)......, certify that I am the (Office held)....., of the corporation named as principal in the (performance) (and) (payment) bond(s); that who signed the said bond(s) on behalf of the principal was then (Capacity in which bond was executed)...... of said corporation; that I know his signature and that his signature thereto is genuine; and that said bond(s) was (were) duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body.

(Affix Corporate Seal)

(d) Name of Principal. When a partnership is a principal on a bond, the names of all the members of the firm shall be listed in the bond following the name of the firm and the phrase "a partnership composed of." If a principal is a corporation, the state of incorporation must appear.

NASA PROCUREMENT REGULATION

10.111-2

BONDS AND INSURANCE

(e) Date of Bond. A performance or payment bond other than an annual bond shall not antedate the contract to which it pertains.

(f) Continuation Sheet. The Standard Form 25-B (Continuation Sheet) is prescribed for use when there are more than seven sureties on a bid, performance, or payment bond. It shall also be used when there are cosureties on an annual bid or performance bond.

10.111-2

CFR TITLE 41 CHAPTER 18

« PreviousContinue »